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Power Lunch

News/Business. Sue Herera, Tyler Mathisen. Today's news on the economy, markets, real estate, media and technology. New. (CC)




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U.s. 14, China 8, Fbi 8, Sec 6, Us 6, Bethanie 5, Tyler 4, New York 4, Dom 4, Kate 3, Preet Bharara 3, Mr. Cohen 3, John Chen 3, Kate Kelly 3, Europe 3, Mr. Bharara 3, Goldman Sachs 3, Unaggressive 2, Thorsten Heins 2, Cialis 2,
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  CNBC    Power Lunch    News/Business. Sue Herera, Tyler Mathisen. Today's news on  
   the economy, markets, real estate, media and technology....  

    November 4, 2013
    1:00 - 2:01pm EST  

week we've kicked off, ecb, gdp, jobs report, what do we expect? >> basically the euro etf, i think that goes well, if they cut it's going to be like japan. >> that does it for us. have a great rest of the day. "power lunch" begins now. and we welcome you to "power lunch" and we begin with breaking news. embattled hedge fund sack capital reaching a settlement with the government, a landmark insider trading case against the firm. steven cohen's hedge fund pleading guilty and paying almost $2 billion stemming from the investigation that led almost five years. the u.s. attorney for the southern district of new york is set to hold a news conference at that podium moments from now. when that begins we will take you live. my partner tyler at the nyse, first to kate kelly at the news
ken fre -- conference, kate? >> we're waiting for the start of this slated 1:00 press conference with preet bharara. tough terms coming out of his office from the settlement reached. $1.8 billion fine related to insider trading as well as the surrender of their license. their ability essentially to manage outside money. they will become a family office shortly after the settlement is approved by judges. they have pled guilty to five counts against them, one of wire fraud, four of securities fraud and we'll hear more detail i'm sure on what they admitted to in terms of insider trading and perhaps not best supervising their employees. in a letter to the judges today two judges who need to approve this settlement in order for it to be set in stone, bharara said considering all things the depth and breadth of the wrongdoing here he thought these penalties were steep but fair. interesting but lotough languag
out of his office. he has amassed a track record of insider trading convictions and cases. more from bharara in a few minutes. waiting for him to get to the podium and he's sure to field a lot of good questions. >> all right. kate, thank you very much. let's bring in our scott cohen and cnbc contributor bethanie mcclain, she profiled ba regard ra and cohen for "vanity fair"p. while cohen has been the focal point of mr. bharara's probe, dozens of others have been convicted or xwraadmitted guilt similar investigations. how broad are these investigations of wall street? how much blood is in the water. >> they've been very broad. it's reached into an expert network that's shut down a couple other hedge funds and it's not over yet. it's continuing. while sac capital is pleading guilty, the letters explicitly
says that investigations against individuals remain open. and there's also this sec case continuing against cohen accusing him of failure to supervise. this isn't an end point so much as one more marker along the way. >> so scott, you've covered a lot of these cases over the years. raj rotman going back to worldcom, a case of a different sort, can you recall one that was as long in the building as this one? >> well, the interesting thing about this one, tyler, i think is the quality of the lawyering on both sides and the chess match that has gone on here and the fact that steven cohen individually has managed to escape charges. surely his financial empire is going to change considerably, becoming sort of the family office trading his own money but there was -- there's quite a chess match that's led up to this. bethanie is right, this is going to go on. this is a rich vain still for
preet bharara. if you think back to five years ago when you had this growing industry of expert networks, almost it was a replacement with the old analyst research, this was going to tap people in and hedge funds into the deep knowledge of companies that's changed entirely and the way that hedge funds conduct themselves in terms of gathering information has changed because now they know there could be someone listening in on the line. >> you know, scott, you also covered matthew martoma's move with the government and i wonder his case i think is set to go to trial in january, he has yet to come up with a plea deal with the government. he's maintained his innocence, but, of course, he worked for sac and now that sac is in this settlement with the government, how does that impact the two pending trials that are going forward, one in november and one in january? >> the one in november is michael steinburg, another sac trader and matthew martomba the portfolio manager.
wit was a roll of the dice to hold fast and not cooperate against his boss. he's kind of left hanging in the wind because the firm is pleading guilty and under this plea agreement it doesn't bar the government from going after individuals. these cases go on now and these traders, matthew martoma and michael steinberg and sandeep arguerwall, facing a deadline to be indieted today, they potentially are in a heap of hot water now, even more than they were. >> bethanie, do you want to weigh on that? it seems it strengthens the government's case against those individuals? >> you would tink that it does. i'm not sure what the rules of evidence will permit in terms of what's allowed to be brought in. one interesting thing about this settlement that would be worth asking about, that it explicitly provides that judge can't blow it up. the judge has to sign off on it as is or the settlement deal is off. and that stops judge sullivan
who has a reputation for being a pretty tough judge from tossing a lot more money into the mix or demanding other conditions that the government hasn't already agreed to and implies to me that sac had some leverage in this negotiation which i think is really interesting. >> you know, bethanie, let me get you to jump in and scott, you as well, you made the point earlier that this is by no means an end to these investigations, that it is maybe the cup collusion of one chapter in a long novel here. so my question for you is, what is the message, bethanie, that preet is trying to send to wall street and what is wall street hearing? we hear a lot of discussion sort of off-line that wall street feels picked upon, the word vendetta is used with respect to either sac capital, this has been going on for a long time, picking on him, picking on chase, what is wall street hearing from these kinds of actions? is bharara's message being heard. >> be scared, be very scared.
seriously i hear two trains of thought. one is that sac is guilty, that the firm has always been regarded as a place where insider trading flourished and good for the government. i hear a distinctly other train of thought which is that nothing sac has done is worse than anything else. the fact that the government can't get cohen himself proves this has been a vendetta against sac and extremely unfair for the government to have in effect shut sac down and brought these fines without ever being able to get close to cohen personally. and i really think there's a hugely split opinion and it really depends on who you talk to. >> the other aspect of this is the fact that there's a lot of third parties involved in this in terms of trading and sac put a lot of volume into the market. scott, do you anticipate any disruption in the market? >> it doesn't appear that way kate kelly was talking about this earlier. there was a carefully crafted protective order on the day that is sac was indicted that was
designed to insulate some of the firms that might have been innocent victims. you can argue they kind of had to know there was insider trading going on. they were insulated and allowed to continue to do business. there was very much a consciousness on the part of the u.s. attorney's office to try to make sure the damage from this or the penalties from this were confined to the people who really were kulculpable. >> nothing beats an empty podium but as i watch there, we await mr. bharara. scott you have been following news of another major settlement involving one of the biggest drug and pharmaceutical companies. >> big settlement announced maybe somewhat overshadowed by this but still is a $2 billion settlement involving johnson and johnson. caps a ten-year federal investigation into a drug that ones was among their biggest sellers, risperdal, anti-psychotic drug for schizophrenia and bipolar dils disordersp. but for years were marketing the drug in dementia patients and
children for attention disorders. knowing the drug posed serious health risks, strokes, diabetes, and hormonal issues. >> these are not victimless crimes. americans trust the medications prescribed for their parents, grandparents and themselves are selected because they are in the patient's best interest. >> back to new york. to new york. our breaking news. the news conference concerning sac is about to begin momentarily. there will be two speakers. u.s. preet bharara. let's go to that news conference. a landmark settlement in this insider trading case with sac capital. >> good afternoon. my name is preet bharara and i am the u.s. attorney for the southern district of new york. this past july we filed a criminal indictment against four sac capital companies for
engaging in insider trading that was substantial pervasive and on a scale without precedent in the history of hedge funds. three months later, we are here to announce a resolution that is matching in its magnitude. all of the charged sac companies have agreed to plead guilty, all have agreed to wind down and close their outside invest mpt businesses and all have agreed to pay total fines and penalties in the record amount of $1.8 billion. today's agreements, if approved, would resolve the two cases brought by the government against sac in july, both the criminal indictment against the sac companies and a separate civil forfeiture and money laundering action as well. both agreements were sent this morning to the two district court judges, presiding over those cases for their review and their approval. the plea agreement announced today, moreover, is solely
between this office and the sac companies and involves no individuals, it does not include pleas of gil guilt by any individuals or provide criminal protection or immunity for any individuals going forward. let me also stress that individual defendants who have been charged and are awaiting trial, are presumed to be innocent and the plea agreement announced today does not affect that presumption in any way. now before i discuss the agreement in more detail, let me introduce our partners in this investigation and in this prosecution. i am joined by i am so often in cases of this magnitude and importance by the fbi, led by george venzalos in new york. today the fbi represented by april brooks, in charge of the criminal division. i want to thank george and april for their dedication and for the dedication of their teams, fbi agents, notably doug left, dave
shav and kathy diskin and matthew callahan, bj kank, james hinkle and matthew thorson for their incredibly hard work and assistan assistance. we wouldn't be here but for all their dedication and hard work and also want to thank the many staff attorneys at the securities and exchange commission at the enforcement division with whom we've worked closely on so many aspects of this investigation and coordinated nicely with them as we always do. i want to thank and acknowledge the dedicated career prosecutors to my right who have made today possible ar lo brown, antonio apps and john zac, they're handling the prosecution on the criminal side. also christine magdo and mikea smith for their work on the forfeiture assets of the case and sharon cohen levin. let me take just a couple of minutes to go through and talk about the particulars of today's
agreement with the sac capital companies. let me first make clear we are -- what we are announcing today is that the government and the defendants have reached an agreement with one another. it is now for the courts to independently consider those agreements and the agreements between the parties have no affect unless and until the courts grant approval. the main features of the agreements are fairly straightforward and summarized in a chart to my right. if you take a look. as you know, on the indictment filed on july 25th there were five counts. in the dimts. the total [ inaudible ]. >> we cannot hear you -- >> i will try to speak as loud as i can. >> the total penalties are $1.8 billion. they are divided as follows according to [ inaudible ] described on the paper sent to the court today. $900 million fines in connection with the criminal case, 900 --
back to the podium now. $900 million fine back to the criminal case and $900 million resolution back to the civil case which means it's a total of $1.8 billion. as you may appreciate, the securities and exchange commission reached an agreement with respect to sac capital and those companies to the tune of $616 million based on conduct that is overlapping with some of the conduct we allege in our civil money laundering complaint and so if you subtract that out, according to the agreement we have, they get a credit for that and the total additional payment beyond what has already been agreed to with the s.e.c. is $1.184 billion. other key terms of the agreement are that the entities agree to wind down in an order fashion their invest mpts advisory business to be approved by the sec, they have agreed to accept the maximum term of probation
after pleading guilty of five years and agreed to retain with our consent and approval a compliance consultant so that person can make sure everything is going as it should go at the entities during the period of their wind down. there's another key point worth noting about the financial penalty. it's a burden that will not fall on third party investors. the sac companies have made clear no outside investor money will be used to pay the penalty. the settlement terms moreover provide for an orderly wind down and payment schedule of this record penalty to minimize any market disruption. i should also stress neither sac nor any person paying any portion of the $1.8 billion penalty will be permitted to claim any tax deduction or benefit in connection with this payment. so that's what's in the agreement. often as is the case here, in addition to describing what is in the agreement, it's just as important to note what is not in
the agreement. here there is no immunity from criminal prosecution for any person as i mentioned. in fact, as i said, this agreement does not have any binding affect on any any individuals either charged or uncharged and while the agreement today may end the government's prosecution of the sac capital companies, with respect to individuals, either at this hedge fund or the countless other financial institutions that buy and sell securities, we will continue to pursue insider trading investigations and follow the facts wherever they lead and the investigation in this case on the criminal side remains ongoing. now as i said just about four years ago, at the time of our first major insider trading arrests, greed sometimes is not good. and there are at least 75 convicted insider trading defendants who today would likely agree. but individual guilt is not the whole of our mission.
sometimes blame worthy institutions need to be held accountable too. no institution should rest easy in the belief that it is too big to jail. that is a moral hazard that a just society can ill afford. law enforcement should not shy away from holding institutions responsible when it is justified and necessary for both deterrents and accountability. whether the misbehaving corporation is a hedge fund or a commercial bank or a manufacturer of a popular product because sometimes institutional punishment is essential to serve justice and to deter misconduct. today, one of the world's largest and most powerful hedge funds agreed to plead guilty, to shutdown its outside investment business and pay the largest fine in history for insider trading offenses. that is the just and appropriate price in our view for the pervasive and unprecedented
institutional misconduct that occurred here. now let me call to the podium april brooks, our partner from the fbi. >> good afternoon. in 2006, with new information about rife and unbridled trading at hedge funds the fbi went to work. after examining trading anomalies poring over documents, conducting surveillances and making the first approach to a key target, that individual began cooperating with the government. what started with a key cooperator, led to thousands of hours of relentless investigative work. by a team of fbi agents uncovering an extensive network trafficking in insider information throughout the hedge fund industry. a network that has been chronicled by many of you. the result in part brought today's plea and is the latest step in the largest insider
trading investigation in history. none of this would have been possible without dedicated prosecutors willing to bring charges here in the southern district. led byes u.s. attorney preet bharara and u.s. attorney richard zabl. i would like to recognize arlen brown antonio epps, john zach and their chiefs mark burger and angwynn saneny and recognize the team from my office, fbi special agents matthew call la han, james hinkle, matthew thorson, bj king, and david makele. i also want to emphasize today's announcement has no effect on any individual awaiting trial. those defendants are proven innocent until proven others. what sac's capital's plea demonstrates is cheating and breaking the law were not only permitted butsds allowed to persist-point sac focused on
hiring the best talent, talent who was equipped with extensive networks to circumvent traditional lines of communication. talent who would be prepared to get confidential information to fuel their elicit trades. sac didn't just break the law, their illegal activity resulted in insider trading that was substantial, pervasive and on a scale without known precedent according to the july indictment. it was nothing sort of institutional failure. in today's agreement, sac capital will plead guilty to all five counts in the indictment. the result is $1.8 billion in fines and forfeiture, the largest penalty and an insider trading investigateshion ever. they will terminate operations as an investment adviser and required to have real, genuine compliance overseen by an independent expert. in layman's terms, sac will no
longer be able to invest anyone's money but their own. as today's plea illustrates, sac institutionalized their practices by cull stivate agriculture of corporate corruption. to those on the street who ven rate michael doug glass's character gordon gekko, understand, principles are just as important as your profit. the problem of insider trading is real and for companies that willfully turned a blind eye, beon notice how your employees make their money is just as important as how much they make. today is not the end. the fbi's investigation into insider trading on wall street, main street, and hedge funds, and expert networking firms and anywhere else continues. we will relentlessly pursue this anti-competitive criminal behavior until every port flol manager, every trading desk,
every hedge fund owner stops trading on insider information. thank you. >> thank you, april. i'm happy to take your questions. >> [ inaudible ]. >> today's announcement is with respect to the companies that were charged by this office on july 25th and the resolution is limited to those companies and as i said before, and i'll repeat again, there is no immunity or protection for any individuals from criminal pro prosecution or investigation. >> [ inaudible ]. >> well, it means as it always means in any kind of criminal case, if someone misbehaves there's additional penalties that can be brought to bear. and i'll refer you to the plea agreement itself which lays that out. yeah. >> [ inaudible ]..
>> the agreement is for them to plead guilty and that's done by an appropriate corporate representative at a time that the judge, if the judge approves the agreement, would set at some point in the future, but yes. >> [ inaudible ]. na can happen in one proceeding and i will leave that to the court about how that judge would like to handle the resolution here. yeah. >> [ inaudible ]. >> sometimes plea agreements are cooperation agreements and sometimes straight pleas and this is a straight plea. yeah. . >> i don't remember the answer to the last question. i'll refer to the document. where does the money go?
the united states treasury and depending on what proceedings happen and claims made it will be distributed thereafter. it all goes to the same place. yeah. it is used in the same way all money forfeited in all criminal penalties, in that same fund. yeah. >> [ inaudible ]. >> you're asking multiple questions, but what i made clear in the remarks and what the companies have made clear, is that obviously there are money -- there's money that exists in accounts in corporations and sometimes they're bound up in securities and sometimes they're held in part in cash and the companies have made clear wherever it is coming from it is not coming from the holdings held by outside investors in those funds and you can draw your conclusion
as to what that means then. yeah. >> [ inaudible ]. >> the first thing is, these are proposed agreements between us and the sac entities. they still have to be approved by the court. and so nothing is triggered until an approval by the court. at that point, take a look at the plea agreement, i forget what page it's at, within ten days of sentencing, there is supposed to be a discussion about who the consultant should be and that person has not been selected yet. i forget what the second part -- oh. again, there is no resolution here with respect to any individual like i made clear. so if an individual decides he or she who had been associated with sac capital decides he or she wants to open up a new hedge
fund, that person would have to go through the approval process with the sec and as you may be aware the sec, securities and exchange commission, has a pending administrative action for failure to supervise against the principal of sac capital and that person would have to get the approval of the sec to do something different outside of the am bit of the sac capital companies. yeah. >> [ inaudible ]. these entities will cease to exist and our agreement says nothing about any individual to manage outside money. our agreement is with this companies. the sec is the primary regulator on issues of this cups kweps has a pending action against the principal of sac capital and that case has not been resolved. yeah. >> as i've said and many have
talked about in this case, there are all sorts of victims. some include everyone who believes the markets should be fair and the same rules apply to everyone. other victims include potentially companies who had individuals there who were stealing their information ability what kind of money they were making and selling it to people in advance of what when it was becoming public. another set of victims in the broad sense and some of the people who are most vindicated by the result today if it's approved by the two district court judges and that's people who are honest in the business and who were honsest in hedge funds and there are many, many more of them than dishonest people and those people are the ones who really are vindicated because when you take the people who are and the institutions not playing by the rules off the playing field those people who are doing it the right and honest way with integrity and care about compliance and care about making sure they're doing things by the rules, then their activity is vindicated in that regard. >> [ inaudible ].
>> you take everything into account there's some art and science to it. given the amount of insider trading activity we have alleged with respect to those entities, over the course of a long period of time it talks about a long period of time, a lot of different securities, a lot of different people, talks about a lot of sectors and if you take a look at the amount of money that the companies have made, seem to us to be a fair but steep and equitable resolution it's several magnitude larger than the identified avoided losses and gains made by the companies over the time we allege in the indictment and something like 20 to 25% of the remaining funds in the hedge fund as a whole. if you take a look at the sentencing guidelines applicable to this case but not binding but they're des kregs nary, as you
see set forth in the plea agreement that the sentencing guidelines range on the order -- on the criminal side 800 something million dollars. we have sought a penalty in excess of what the maximum you might calculate the sentencing guidelines is. to take those things together to send a message of deterrence and proper exacting of the penalty and given the magnitude of the activity and insider trading conduct, this seemed to us to be as we said in our letter, steep by fair. yeah. >> [ inaudible ]. >> what has happened today is very substantial and important thing. it is a rare thing for any entity to be held to account as an entity and that has been true for a number of years now.
it's been more rare for that entity to plead guilty to everything charged with but not only rare but unprecedented to have a criminal fine and penalty of the magnitude we have described. as i've said a number of people have been charged and convicted and the investigation remains ongoing and we are not shy in retiring people. these folks aren't and these folks aren't either. we're not unaggressive. we bring cases when we have proof beyond a reasonable doubt we can convince a jury unanimously of someone's criminal guilt and when we get to that point with respect to anyone, whether it's at the top or bottom or in the middle we bring the case at that time. last question. somebody who hasn't -- yeah. >> [ inaudible ]. >> those companies are winding
down and are ending. on a schedule that will be figured out by the sec and subject to the sec's approval. you know, you have an insurance policy with respect to how long the wind down takes. my expectation is, you don't feed the whole five years necessarily but it's there. final question. >> [ inaudible ]. anecdotally the suggestion less than it used to be. we have seen from cases we've had including in wire taps of people who had not yet been charged when we were conducting some of the arrests we were conducting. you can tell from their conversations that they were a little more hesitant to engage in that activity. if you look at the nature of the legal business and compliance business at a lot of places they will tell you anecdotally that a lot of hedge funds have come in and other institutional traders have come in to figure out ways to -- ways to figure out red
flags better, deal with expert networking firms better, try to figure out ways to make sure the hiring practices are better. overall, it seems to me from anecdotal evidence and common sense that when you see, you know, 75 people and counting who are criminally convicted and who had every privilege and, you know, every bit of education and every opportunity and money to spare, being convicted and separated from their liberty in most instances, that has a deterrent effect on other folks. impossible to quantify but when you talk to people in the industry it's less than it used to be. thanks very much, guys. >> all right. that's the u.s. attorney, detailing the case against sac capital in a landmark settlement. almost 5 years in the making. let's get a comment from everybody. bethanie, want to go to you. there was a shot across the bow and he's done it before, mr. bharara has, he said sometimes greed is not good, sometimes
blame worthy institutions should be accountable too and no unsti tution should rests easy in the belief it is too big to jail. a shot across the bow against some of the big banks out there perhaps. what do you think? >> really interesting comment. i noticed that too. and i couldn't tell if it was a warning sign to the big banks or if it is part of this sort of ongoing if you're a conspiracy theorist, attempt to deflect from the lack of prosecutions after the financial crisis and focus people on everything the government is doing with insider trading. you could read it one of two ways. >> seemed to indicate to me he's not done. he's not done. >> my favorite line in his press conference we are not unaggressive. >> i think that's putting it mildly. >> we are not unaggressive. that's the understatement of the year. do either of you think, as he pointed out there have been 75 either convictions or agreements to plead guilty on insider
trading, do either of you believe that mr. cohen himself is now in the clear, legally? >> here's the thing that amazed me as i listened to all of that. sac capital is steven a. cohen. it's his firm, he was supposedly running this place that was a breeding ground for insider trading, he's going to be fine. he's going to come out of this a multibillionaire, can still trade his own money. a lot of people that worked for him will lose their jobs. but steven a. cohen seems to have escaped criminal charges technically he hasn't because the investigation is still open regarding individuals, and yes, he could still face a fine from the securities and exchange commission -- >> basically they couldn't get him, right? they couldn't get him? >> they couldn't get him or he had really good lawyers or a combination of both. but he's going to come out of this with, you know, $9 billion of his own money to trade and no individual culpability criminally and that says something. >> all right. let's go to kate kelly who is outside the location where mr.
bharara was speaking a few minutes ago. kate? >> hey, tyler. an interesting and relatively brief press conference we finished that i know you guys all saw. a couple things i picked up on, one was a bit of defiance on the part of the fbi and the southern district, a feeling that this is not over yet, answering a lot of questions about why steve cohen was not ultimately a part of this case, whether he could be in the future and they did say we're certainly keeping every possibility open. a lot of confusion, too, about what's next for sac. there is this five-year probation so at max, bharara explained it will take them five years to wind down their current businesses and close forever. they may be able to become a family office for some period of time, perhaps the principals will reopen a new hedge fund at some point. we'll wait for more clarity from sac which has yet to comment, but a little bit of a defense there in spite of the fact that this was a landmark amount of money and there were five guilty pleas to securities and wire
fraud is somewhat unprecedented, tyler and sue, or perhaps entirely unprecedented. we don't know what all the other cases are but the amount of money certainly is. >> i know we have to go, but kate, what was your read of that statement that i put the question to bethanie, that no institution is too big to jail. did you interpret that as he's going to become more aggressive against some of the big banks? >> potentially yes, and i think we've seen some evidence of that already with the tone that both bharara but also his boss eric holder are taking with jpmorgan. i think it's a rebuttal to this notion presented about six months or a year ago that is the case. some institutions are too big to jail. i think it's a bit of a warning that there could be tough sanctions down the line. i think we're seeing evidence of that. >> indeed. all right. thank you all very much. appreciate it. let's go to rick santelli. there's been action in the bond market while we've been watching this market and rick has it at the cme.
>> hi. indeed we're trading sub260, risen to that level, down a couple basis points. the most note worthy aspect of today's treasury market in the context of the last fed meeting where we're up basically ten basis points, 13 from the intraday low on the second day of that two-day fed meeting. remember, we have gdp thursday, first look at third quarter, and bls wlaber report friday. both are expected to be sequentially weak. if we look at the foreign exchange market the dollar index at the highest level since mid-september, the euro at the lowest level versus the greenback since the 24th and thursday we'll hear from the ecb. back to you. >> rick, thank you very much. klechina's top leaders to discuss far reaching economic reforms. one big question for investors, is can you trust the transparency in china's banking system? a rare and exclusive interview with the top executive at the bank of china. we'll be right back. [ male announcer ] once, there was a man
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china's top leaders meeting over the weekend to discuss major economic reforms and a "power lunch" exclusive we are pleased to introduce one of the top executives at the bank of
china, the fifth largest bank in the world, one of the largest holders of u.s. treasuries, plus the third biggest foreign lender to commercial real estate in the u.s. joining us from london dr. king lun the chief executive officer of bank of china asset management. a pleasure to have you here, thanks for joining us. >> hi. >> let me start first of all with where you are putting your sizable amount of cash to work globally? we have u.s. markets certainly at record levels on a repeated basis. where do you find the most value for your money on a global basis today? >> europe, europe is very interesting. it's recovering really well. >> what part of europe and are you buying individual companies or are you putting a blanket over more of a country play? >> well, i think beginning of the year we are buying those that were laggards and now we're going for quality because we believe the recovery has partly
been reflected into the markets. we're going for quality and growth. >> growth. all right. let me talk about your u.s. treasury holdings. the bank of china owns an awful lot of u.s. debt and we went through a difficult time in washington. did that worry you at all? did you ever consider diversifying out of your u.s. treasuries given the dysfunction in washington? >> well, i think i would look at it from a macro perspective. if you take into account the exposure to treasuries from all the state owned enterprises the figure would be much bigger than the official $1.3 trillion. obviously we'll continue to invest in the u.s. market, the largest in the world, but we need to look for ways to dive e diversify our exposure. that's the driver. >> yes. let me talk about the transparency issue. there are a lot of american investors who are concerned about a lack of transparency with china in general and also
specifically its banking system. how can you reassure them that is not the case some. >> well, do you believe in the global firm because if you do, then you should trust our figures. all the major banks use global accounting, these firms as our auditors and by law we have to rotate them every six years. >> all right. thank you. we appreciate it. thank you very much to dr. king lun, ceo of the bank of china asset management. down to you. >> thank you very much. which stocks do you own in your 401(k)? we'll tell you the five most wildly held if you own individual stocks if your 401(k). we'll get this answers, we have those answers right after this.
when it when it comes to your retirement plan having the right stocks in your portfolio is key but many americans don't even know which stocks they own. our sharon epperson with the five most widely held companies.
>> it's easy to figure out what mutual funds are in your 401(k) but requires a little more digging to find out the most wildly held stocks in those funds. we did the work and took a look at some of the top mutual funds and 401(k) plans and they told us that among them are fidelity's contra fund and spartan fund and american's funds growth fund of america and two vanguard index funds and then morning star to find out the most wildly held companies in those funds and ranking five is cisco systems. it's in about 1,000 mutual funds altogether making it one of the most wildly held. number four jpmorgan chase, third is google, second is microsoft, and the number one most wildly held stock in 401(k) plans is apple. it's in over 1200 mutual funds. back to you. >> all right. thanks very much, sharon. very interesting findings there about those wildly held stocks.
you got to know what is in your funds. preet bharara firing off a fresh warning to wall street saying no institution is too big to jail. we'll talk about that and more when the power rundown takes off after this short break. up coming coming up on "street signs" which is at the top of the hour, can blackberry still do the proverbial and rise from the ashes like a phoenix? there are a number of other very successfuls companies today that were on life support years ago.
do you like collecting and investing in art? hope it's a bubble not to pop. a post-check on the state of the market. when you gain the extra hour in the day with daylight saves we're going to be talking to someone who says we should be scrapping it altogether. puts a damper on it. i like the extra hour. all those things and, of course, lots more coming your way, back to you on "power lunch." >> thank you very much. let's go to dominic chu for a market flash. >> sue, how about checking out tesla the electric car maker moving higher aquarter of its third quarter earnings release tomorrow. the street expecting a gain of 11 cents on sales of $535 million. you can see there the stock is trading up near session highs. back over to you. >> thank you so much, dom. blackberry ousting thorsten heins. meet the interim ceo, john chen. can he turn the company around? google's eric schmidt speaks out on the nsa. that and more coming up next in
the power rundown. i am today by luck. i put in the hours and built a strong reputation in the industry. i set goals and worked hard to meet them. i've made my success happen. so when it comes to my investments, i'm supposed to just hand it over to a broker and back away? that's not gonna happen. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today. .
time for the power rundown here. bob and dom join me. blackberry's ceo thorsten heins getting the boot. silver lakes senior adviser john chen is in. what do we know about this guy, dom? >> john chen is a storied and very well-respected technology manager, the man that ran ssybase for years. he ended up selling sybase a computer data base maker to sap and he is a man that has a lot going for him and on the board of the walt disney company and wells fargo. a man who's well connected, knows the tech space and how to turn things around maybe that's the reason why he's the guy that
they're tapping. >> what worries me is what this says about the company, because i mean this guy thor ston had strong economic incentives to do something. if he would have sold the company and dismissed the contract would have been worth $56 million. if not sold it and fired which is what happened the contract was worth a fraction of that. he had an incentive to do something. the fact he couldn't sell the company with that kind of economic incentive is not a good sign. >> you seem to be suggesting that mr. chen is very adroit at turning around companies and preparing them for sale. is that what you think the ultimate outcome is? >> the outcome will have to be something like bob said with regard to selling the whole company or seems more likely bits and pieces of it for as much as they can. turn to eric smith slamming the nsa over reports the u.s. government allegedly spied on google's data center, describing an act such as outrageous in an
interview with "the wall street journal". feels like maybe he's late to the party with his criticism. >> he's shocked. absolutely shocked that they're actually spying on them. look, obviously they have cited legal restrictions before as a reason they can't talk. now they're starting to feel they have to say something. it's important he didn't say anything and google's never told us exactly how much cooperation they've actually had with these companies. i would like to see them be able to talk a little bit more about it and give us some more details. they feel they can't do that yet. >> dom? >> it's not just that, you have to think about what's happening in the grandeur scheme of things. how much is the american public outraged by the idea that national security agency could be spying on them. the foreign intelligence surveillance act, all those things very much in question with regard to how google and nsa and everybody treats electronic data. >> the hour's top story and that is preet bharara firing a fresh warning saying that no institution is too big to jail. let's take a listen.
>> greed, sometimes, is not good. and there are at least 75 convicted insider trading defendants who today would likely agree. but individual guilt is not the whole of our mission. sometimes blame worthy institutions need to be held accountable too. no institution should rest easy in the belief that it is too big to jail. >> something he has said before, dom, but you can't help, given the context, he's gone after now one of the largest hedge funds in the world, and basically supervised its dismantling, guilty pleas to five counts here, one wonders and he's got ongoing stuff with the biggest banks in the country. >> here's the interesting part about this. wasn't that long ago that goldman sachs got sued in the abby cas debt ffiasco, a $500 million settlement. it's routine for us to put "b"s
behind these, billions of dollars. you wonder how much it costs you more when you try to fight these things or delay these things as opposed to just trying to settle them off the bat. >> even more surprising, is the fact that they -- he made it very clear they can still go after individuals. you can say heck, he couldn't get mr. cohen, so they had to go after the company. i don't read it that way at all. they have definitely left the door open to go after other individuals in addition to mr. cohen down the road. >> and they've gotten several plea and pending charges against individuals at sac capital as well as that. time will tell on that last point. gentlemen, thanks very much. great to be with you. sue? >> guys, when we come back, we have today's top stock winners on "power lunch." we're back in two. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters.
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welcome welcome back to "power lunch." shares of on-line cou upon provider groupon rallying after deutsch and goldman sachs issued positive notes about the company. investors appear to expect groupon's third quarter sales to come in below its guidance range of 585 to $635 million. analyst ross sandler reported that's what he says but does
expect groupon's third quarter sales to exceed investors' outlook and bullish on groupon was goldman sachs who predicts that company's third quarter sales will exceed the average analyst estimate. sue, back over to you. >> nice gain of 7%. thanks, dom. all right. the markets right now kind of quiet but trending to the upside. the dow up about 8 pointsen on the trading session, s&p up 3 and a gain of almost 7 in the nasdaq. some winners for you in today's trading session so far, include vul can materials up 9% to 7% gain for alcoa and cliffs naturals up about 5.3%. a lot of the material and resource stocks moving higher. today's winners a number of key dow components higher earlier on and have lost a little bit of their strength and that's why the market is kind of trending to the upside. >> one of the things kenny pointed out to me the volume today is are extraordinarily low. 2:00, 332 million shares traded.
volume about 2.5 times greater than down volume today but a quiet to your point rather quiet day. we've gotten spoiled with the trading in the past. >> never trust a quiet market. >> right. we'll wrap it up for this edition of "power lunch," sue. >> see you when you get home. "street signs" begins now. also never trust a quiet news anchor. so you should not trust us at all. welcome to the big show, everybody. your hot topics, can blackberry rise from the ashes like a phoenix or will the company meet its end. with its ipo this week who's using twitter? the one thing nobody is talking about that may save christmas and the most important question anybody today is asking, mandy, should we dump the stupidity that is daylight saving time? i'll remind everybody sun set at 4:48 ton.